Assessment of efficiency of a policy on reduction of CO2 emissions in Ukrainian forests for three socio-economic scenarios

Turkovska O, Ohremchuk IA, & Gusti M(2015).Assessment of efficiency of a policy on reduction of CO2 emissions in Ukrainian forests for three socio-economic scenarios.Research Journal of Ukrainian National Forestry University 25 (4): 98-104.

Abstract

Reducing greenhouse gas emissions in the energy sector is one of the main reasons why conventional energy sources are being replaced by renewables. Obviously, changes of state's energy balance will affect energy sector as well as contiguous sectors of economy.

We consider the issues of utilizing the renewables, in particular wood biomass in order to observe the impact on CO2 emissions changes in forestry and efficiency of implementation of emission reduction policies. It is necessary to find reasons and possible ways for changing the amount of utilized wood biomass as the primary energy source.

We developed three socio-economic scenarios to project possible directions of energy policy and economy development considering utilizing renewables and reducing greenhouse gas emissions. We evaluate carbon dioxide emissions in forestry sector for the scenarios applying Global Forest Model (G4M) which was adopted for Ukraine.

Scenario A (initial). We assume that there are no significant changes in the law which can impact the amount of utilized renewables. Increase of biomass energy usage is slow and it is based on local incentives. Harmonization of Ukrainian legislation with EU directives towards environment protection is low. Carbon tax remains unchanged - 0.26 UAH per ton of carbon dioxide.

Scenario B (optimistic). Adopted legislative incentives will obtain encouraging conditions for utilizng renewables (improved "green tariff" for heat and electricity). The new goals for utilizing different energy sources will be set up as well. In paricular, the share of renewables in Energy Balance of Ukraine will increase due to proposed level of the new project of Energy Strategy of Ukraine till 2035. Carbontax may be increased.

Scenario D (agricultural). Development of agricultural sector of Ukrainian economy is a priority for the state. Therefore, production and export of agricultural commodities will increase. However, legislative incentives will target agricultural sector as well as energy sector, in particular increasing utilizing renewables (improved "green tariff" for heat and electricity). Carbon tax may be increased.

According to simulation results of G4M we can conclude that increasing of wood demand drives its production and reduces forest carbon sequestration. In particular, in 2030 with zero carbon price for Scenario A carbon sequestration is 4.76 MtCO2/year and for Scenario B sequestration is reduced to 1.19 MtCO2/year due to high wood demand. Reducing CO2 emissions in the energy sector by utilizing wood biomass causes reduction of carbon sequestration by forests. However, increasing the carbon taxes can cause increasing of carbon sequestration. Scenario B is the most sensitive to carbon taxes, additional sequestration can reach 7.2 MtCO2/year while in Scenario A it is not larger than 3.7 MtCO2year at 2030.

Increased carbon taxes force forest owners to sequester the carbon. In order to minimize negative effect of increasing wood production, it is reasonable to intensify forest management at the same time with increasing carbon taxes. Estimation of more accurate optimal carbon price requires additional studies.